US Dollar: Watch Out for Housing and Confidence Next Week

There is key US economic data coming this week that will determine the weekly fate of the dollar. Housing market releases will be on the forefront this week. Housing starts are on Monday and are expected lower. This could mean the USD will be weaker. However with oil prices at six month lows inflation concerns have lowered. The lower gas prices could keep consumer confidence higher and balance out the Housing Starts information. The Consumer Confidence Report is on Tuesday. Short term it appears the USD selloff is played out. Increase consumer confidence may result in a bounce.

US Dollar: Watch Out for Housing and Confidence Next Week

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Virtually Commission Free Trading

In most financial markets, traders must pay a spread and a commission. All traded financial products have a 'bid' (buy) price, and an 'ask' (sell) price, with the difference defining the spread, or cost of placing the trade. Forex online trading platforms include both the buy and sell price. This allows traders to see the real cost of the trade. The spreads are tight because of the around the clock liquidity in the currency market. Other traders are more vulnerable to liquidity risk and typically receive wider dealing spreads, especially during after-hours trading.

FX day trading charges no commission or transactions fees to trade currencies online or over the phone. The over-the-counter structure of the currency market eliminates exchange and clearing fees, which in turn lowers transaction costs. Costs are further reduced by the efficiencies created by a purely electronic market place that allows clients to deal directly with the market maker, eliminating both ticket costs and middlemen. All clients have access to dealable bid/ask quotes. For example, in the futures market, the prices represent the last trade, not necessarily the price for which the contract will be filled. This lack of transparency hides the true cost of the trade. Your broker of choice is compensated through the spread which varies depending on which currencies you trade and the broker you choose. The spread is the difference between the current bid and current ask price on a specific currency.

Forex vs Stocks

On the Forex market, there are only six major currencies. This allows a trader to focus and concentrate on which currencies to trade. In the equities market, there are over 40,000 stocks to choose from. Which stocks do you choose?

On the stock markets, most people make money when shares are rising, but in economic recessions and falling 'bear' markets, there is little chance of making serious money. In the Forex market there is a big difference.

One of the most exciting advantages of FX trading is the ability to generate profits whether a currency pair is 'up' or 'down'. A trader can profit by taking a 'long' position (buying the currency pair at one price and selling it later at a higher price) or a 'short' position (selling the currency pair and buying it back at a lower price). In either case, there is always a good market trading opportunity for a currency trader. The ability to sell currencies without any limitations is a distinct advantage over stock trading.

For example: If you think the US dollar will increase in value versus the Japanese yen, then you will buy dollars and sell the yen (go long). If you think the yen will increase in value against the dollar then you will sell Dollars and buy yen (go short). As long as the trader picks the right direction, a potential for profit always exists.

Forex Is Perfect For Technical Traders

The strong trends that foreign currencies develop are a significant advantage for technical traders. Unlike stocks, currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. Over 80 percent of volume is speculative in nature and, as a result, the market frequently overshoots and then corrects itself. A technically trained trader can easily identify new trends and breakouts, which provide multiple opportunities to enter and exit positions.

Interbank Market

The backbone of the Forex market consists of a global network of dealers. They are mainly major commercial banks that communicate and trade with one another and with their clients through electronic networks and telephones. There are no organized exchanges to serve as a central location to facilitate transactions the way the New York Stock Exchange serves the equity markets. The Forex market operates in a manner similar to the way the NASDAQ market in the United States operates, thus it is also referred to as an over-the-counter (OTC) market.

Uncorrelated To The Stock Market

A trader in the Forex market is involved in selling or buying one currency against another. Thus, there is no correlation between the foreign currency market and the stock market. A bull market or a bear market for a currency is defined in terms of the outlook for its relative value against other currencies. If the outlook is positive, we have a bull market in which a trader profits by buying the currency against other currencies. Conversely, if the outlook is pessimistic, we have a bull market for other currencies and traders take profits by selling the currency against other currencies. In either case, there is always a good market trading opportunity for a trader.

Open and trade on Mini Accounts with as little as $300 USD

Many brokerages do not allow you to invest in odd lots, but only in blocks of 100 shares at a time. With many stocks valued at between $30 and $200 that can mean an investment of $3,000 to $20,000, or more. But you can invest in foreign currencies for as little as a $300 USD deposit with mini-contracts. The smaller trade size enables you to take smaller risks. Mini-accounts are intended to introduce you to the excitement of currency trading while minimizing your risk. You can try out the demo account and paper trade or you can open up a mini-account right now and trade for real.